Hong Kong Financial Forum 2023

His Excellency Mr. John Lee Ka-chiu, Chief Executive, Government of the Hong Kong Special Administrative Region, who has so tirelessly promoted Hong Kong's brand as the city's top salesman

His Excellency Mr. Zheng Yanxiong, Director of the Liaison Office of the Central Government in Hong Kong, who has actively helped to bring the Chinese government's full support for Hong Kong

Mr. Peter Lam, Chairman of the Hong Kong Trade Development Council,

Distinguished Guests,

Ladies and gentlemen,

I thank the South China Morning Post, the Hong Kong Economic Times and the Hong Kong Trade Development Council for the invitation to speak at the Inaugural Hong Kong Financial Forum.

In a world confronted by the challenges of climate change and environmental degradation, green finance has emerged as a vital tool in our transition to a more sustainable and environmentally friendly economy. This is where Hong Kong has a unique role to play as China’s offshore capital hub, for both traditional finance, and green finance. One key modality of green finance, green bonds, has been growing rapidly. In 2022, global green bond issuance totaled over US$440 billion, with China, Germany and the United States being the largest issuers of green bonds.

Green bonds and green finance seek to promote investments that have a beneficial environmental impact and aid in the fight against climate change. This can entail, among other things, investment in renewable energy projects, energy-efficient technologies, sustainable agriculture, and environmentally friendly infrastructure.

The demand for green finance has never been greater. Climate change's effects are becoming more visible, with more frequent extreme weather events, rising sea levels, and biodiversity loss. Immediate action is needed to alleviate these adverse impacts on people and planet.

While China is working to address its environmental and climate challenges, it remains the largest emitter of greenhouse gases.

China must build on the substantial progress it has made in green finance by expanding and accelerating projects with environmental benefits. In addition, China’s focus should extend beyond just green bonds and actively incorporate these concepts into the Belt and Road Initiative, with the Industrial and Commercial Bank of China issuing the first green finance bond under the BRI framework, further aligning its economic and development initiatives with sustainable practices.

The example of China embracing green financing can serve as an example of how other countries and the private sector can embrace financial sustainability while protecting the environment. Too often, short-term profits have been favoured over long-term environmental sustainability. As a result, there remains a scarcity of finance for green projects and firms, impeding the transition to a low-carbon economy.

The good news is that green finance is gaining traction. Governments, financial institutions, and investors are beginning to understand and appreciate the value of long-term investments. They are implementing green finance regulations and activities such as providing incentives for renewable energy projects, issuing green bonds, and incorporating environmental criteria into investment choices.

Here in Hong Kong, the Green Finance Certification Scheme serves as a benchmark for green finance excellence, providing a framework for evaluating the environmental credentials of financial products and reinforcing the city’s position as a global financial hub and its commitment to sustainability.

Accelerating action will require more than just renewing pledges or increasing ambition: the financing gap to achieve both the Sustainable Development Goals (SDGs) by 2030 and the targets of the Paris Agreement is estimated to be US$4 trillion annually for the SDGs and $100 billion for the Paris Agreement. Reducing this gap means directing more public and private investment and tapping into financing mechanisms such as Green Bonds.

Green Bonds are particularly well suited to finance sustainable development and climate action in the context of Nationally Determined Contributions (NDCs) and green recovery. During the COVID-19 pandemic, the green bond market was particularly dominated by sovereign issuers who saw it as a source of finance for recovery efforts.

In 2020 alone, green bonds provided over $200 billion USD of investment to governments and corporations to finance energy projects, green buildings, and waste projects.

Green bonds are also becoming an increasingly attractive investment vehicle for impact investors, attracting those focused on investing in environmentally friendly initiatives. Hong Kong’s stock exchange has been a leader in this regard, introducing the Green Bond Listing Platform that provides a dedicated avenue for issuers committed to sustainable finance.

Hong Kong has even made headways selling green bonds to retail investors, with the most recent tranche oversubscribed in September.

However, awareness of the opportunities offered by green bonds, the capacity for bond issuances, and the structuring of green bonds remains very low in many countries.

In Africa, only Kenya, South Africa, Nigeria and Seychelles have issued sovereign green or blue bonds to date. In Central and South America, Chile, Brazil and Mexico are leading the way in new issuances. In Asia and the Pacific, general interest is starting to grow after the recent issuances from Fiji, Bhutan and Indonesia.

To fill this knowledge gap, the United Nations, specifically UNDP, have joined forces to build online training programmes on Green Bonds to be delivered to a wide range of government officials and climate professionals. The programmes include the NDC Support Programme, the Inclusive Budgeting for Climate Change in Africa Programme, the Governance of Climate Change Finance for Asia Pacific and the Finance Sector Hub. 

The UN Country Team in China has also actively promoted green and sustainable investment. In 2021, UNDP China partnered with the New Development Bank to issue a US$747 million SDG bond for China to finance sustainable COVID-19 recovery efforts.

Ladies and gentlemen,

Green finance has the ability to generate positive change by incorporating environmental factors into financial decision-making. It has the potential to attract finance for environmentally friendly initiatives, reduce greenhouse gas emissions, and aid in the development of sustainable technology and infrastructure.

Furthermore, green finance benefits not only the environment but also the economy. It has the potential to open up new economic opportunities, create jobs in the renewable energy sector, and improve energy security.

We can create the groundwork for a more resilient and profitable economy in the long run by investing in sustainable projects.

Green financing is an important weapon in combating climate change. It has the potential to hasten the transition to a low-carbon economy and aid in the achievement of our climate goals. However, all players - governments, financial institutions, corporations, and individuals - must cooperate and commit to it.

We can also contribute to green finance as individuals by making sustainable investing decisions and supporting firms that promote environmental sustainability. 

Finally, green financing is critical for constructing a sustainable and resilient future. We can contribute towards a healthier earth and a more prosperous economy by directing investments toward ecologically friendly enterprises.

Hong Kong has taken the first, but firm steps towards green financing. The world’s first tokenized government green bond, to the tune of US$102 million, was issued here in Hong Kong in February. I applaud the commitment by the Hong Kong government, the local monetary authority, the local regulator and the stock exchange for making green finance a reality for both institutional and retail investors.

As UN Secretary-General António Guterres said at last September’s Climate Ambition Summit, “We can still limit the rise in global temperature to 1.5 degrees. We can still build a world of clear air, green jobs, and affordable clean power for all.”

So, together, let us work to embrace green finance and contribute to solving the climate crisis.

Thank you.